There is no better time to raise Japan’s consumption tax, former vice finance minister Eisuke Sakakibara, said on Tuesday as a rise in the tax took effect.
Japan’s sales tax has been lifted to 8 percent from 5 percent, rising for the first rise in 17 years.
The decision to lift the tax has been controversial and there are concerns that the move comes at a bad time for an economy that is getting back on its feet after a period of deflation and lackluster growth thanks to aggressive monetary and fiscal stimulus.
“I think there’s no better time to raise the consumption tax. The economy has been doing fairly well,” said Sakakibara, known as “Mr Yen” for his efforts to influence the yen’s exchange rate through verbal and official intervention as a former Vice Finance Minister of Japan in the late 1990s.
“During the last two years, the average rate of growth has been 2 percent, which is quite high for a mature economy like Japan,” Sakakibara told CNBC.